Jenkins v. Eastern Capital Corp.

Decision Date17 March 1994
Docket NumberNo. C 93-1171 FMS.,C 93-1171 FMS.
Citation846 F. Supp. 864
CourtU.S. District Court — Northern District of California
PartiesJames JENKINS, Plaintiff, v. EASTERN CAPITAL CORPORATION, dba Fitness U.S.A. Health Spas, Defendant.

COPYRIGHT MATERIAL OMITTED

Joseph P. Stretch, Joseph P. Stretch Law Offices, San Francisco, CA, for plaintiff.

Robert A. Dolinko, Epstein Becker & Green, San Francisco, CA, for defendant.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

FERN M. SMITH, District Judge.

ISSUE

This case presents the question whether an agreement stating that employment was to be at will was an integrated contract that precluded proof of a prior implied agreement to terminate only for cause. For the reasons discussed herein, the Court holds that there was an integrated agreement of at-will employment and accordingly grants defendant's motion for summary judgment.

INTRODUCTION

In his complaint, plaintiff stated three causes of action: breach of contract, breach of the covenant of good faith and fair dealing, and discrimination in violation of the California Fair Employment and Housing act. (See Complaint ¶¶ 7-21.) By order dated December 2, 1993, the Court dismissed plaintiff's third cause of action with prejudice. Defendant now moves for summary judgment on plaintiffs remaining causes of action.

BACKGROUND1

Defendant is a corporation which operates four fitness centers in the San Francisco Bay Area. One of its spas is in Daly City (the "Serramonte facility"). Defendant has some affiliation with Detroit Health Corporation, which operates fitness centers in Michigan.2

In August, 1983, plaintiff began working for Detroit Health Corporation. He held a number of different positions with that organization, the last of which was as area supervisor. In that capacity, he was responsible for overseeing several spas in the Detroit area. In 1988, plaintiff was given the opportunity to move to California and take a position as general manager of defendant's Serramonte facility. The position entailed a step down in responsibility, but it offered the potential for increased earnings through commissions. Plaintiffs ultimate supervisor, Stephen Anderson, initially offered him the position on a three-month trial basis. When plaintiff responded that he would only accept the position on a permanent basis, Anderson agreed.

After having accepted the position and moved to California, plaintiff signed a two-page document that was labelled "Application for Work." (See Gross Decl., Ex. Al.) At the beginning of the document, plaintiffs name and the date "12/88" were written. The subsequent sections requesting information were all crossed out. At the end of the document plaintiffs signature and the date "12/88" appear twice, in each instance immediately following statements concerning the terms of employment. The first such section provides, in pertinent part:

I certify that the information contained in this application is correct to the best of my knowledge and understand that any misrepresentation or omission of information requested on this form is grounds for immediate dismissal ... I understand that this company operates up to 14 hours per day, up to 7 days per week, and that weekend work, overtime, changes of schedule and location may be required during my employment. Further, I understand that my employment is for no definite period and may, regardless of the date of payment of my wages and salary, be terminated at any time without any previous notice, with or without cause. In consideration of my employment, I agree to conform to all rules, regulations and policies of this company. No modification of these statements shall be valid unless written and signed by the Company President.

Id. (emphasis added). The final section, captioned "Employment Applicant Agreement" in large capitals, provides, in relevant part:

I, the undersigned, understand that I am being considered as a potential employee of Eastern Capital Corp. dba Fitness USA Health Spas (the "Company"), and hereby certify that:
1. I understand that if I am hired, such hiring will not be for any definite period of time. Even though, if hired, I will be paid my wages on a monthly, semi-monthly, or weekly basis, I understand that this does not mean I am being hired for a definite period of time.
2. I understand that if hired, I will be an employee at-will and I can be terminated at any time, with or without cause, with or without notice ...
3. I understand that this agreement cannot be changed except in a written document signed by me and the Company President.
4. I have been given an opportunity to ask questions regarding Company rules and my potential status as an employee-at-will. No representative of Fitness USA Health Spas has made any promises or other statements to me which imply that I will be employed under any other terms than stated above.
5. I understand that if hired, this Statement is part of the employment arrangement between the Company and me, and will be binding on me.

Id. (emphasis in original). Plaintiff read at least some of the agreement before signing it. (See Stretch Decl., Ex. A, 164:15-21.) He believed that his signature on the agreement was required to enable him to receive pay. (See Opp. 5:20-22.) Plaintiff did not sign any subsequent agreements modifying the terms of the "application."

On June 27, 1991, defendant terminated plaintiffs employment because plaintiff was allegedly unable to motivate his employees or generate sales. (See Stretch Decl., Ex. A-2.) Plaintiff subsequently brought this suit.

Plaintiffs case depends largely upon his allegation that he had an implied agreement with defendant that his employment could be terminated only for good cause. Several factors are alleged to have given rise to this agreement. The Company Employee Policies, which plaintiff received upon commencing employment with Detroit Health Corporation in 1983, list different kinds of conduct for which summary termination is prescribed. (See Stretch Decl., Ex. A-20.) The employee training manual, which plaintiff received at some point during his employment in Detroit, contains a preliminary statement entitled "Outline for Progress." (See Stretch Decl., Ex. A 158:3-22.) This statement informs employees that "you will control your success with this Company by the amount of effort you put forth to learn these duties and responsibilities ... It's 100% up to you." (Stretch Decl., Ex. E.) Stephen Anderson assured plaintiff, as a condition of his accepting the California position, that his employment in California would be "permanent." (Stretch Decl., Ex. D, ¶ 4.) Finally, the 1991 termination letter requires the manager to "check off the reason for termination" and to explain the reason "fully." (See Stretch Decl., Ex. A-2.) Plaintiff submits that the document's requirement of a reason for termination shows that termination was required to be for cause. (See Opp. 4:21-5:1.)

DISCUSSION
I. The Summary Judgment Standard

In order to withstand a motion for summary judgment, the opposing party must set forth specific facts showing that there is a genuine issue of material fact in dispute. Fed.R.Civ.P. 56(e) (West 1992). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). In the absence of such facts, "the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986).

In opposing summary judgment, plaintiff is not entitled to rely on the allegations of his complaint. See Fed.R.Civ.P. 56(e) (West 1992). Section 56 provides that "when a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or otherwise as provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against him." Fed.R.Civ.P. 56(e) (West 1992).

II. The Alleged Implied Agreement to Terminate Only for Cause
A. Presumption of At-Will Employment

The California Court of Appeal has observed that "all employment termination cases begin with the presumption of at-will employment." Harden v. Maybelline Sales Corp., 230 Cal.App.3d 1550, 1554, 282 Cal. Rptr. 96 (1991). This presumption arises from Labor Code section 2922, which provides, in pertinent part: "An employment, having no specified term, may be terminated at the will of either party on notice to the other." Cal.Labor Code § 2922 (West 1989). The statutory presumption of at-will employment can be superceded by a contract, express or implied, limiting the employer's ability to discharge an employee.3 Wilkerson v. Wells Fargo Bank, 212 Cal.App.3d 1217, 1225, 261 Cal.Rptr. 185 (1989). A contract to terminate only for good cause may arise in one of two situations: (1) where the parties agree, either expressly or impliedly, that employment is only terminable for good cause or (2) where the parties agree that employment shall be on a "permanent" basis, and the contract is supported by consideration "independent of the services to be performed by the employee for his prospective employer." Rabago-Alvarez v. Dart Industries, Inc., 55 Cal.App.3d 91, 96, 127 Cal.Rptr. 222 (1976); Ferreyra v. E. & J. Gallo Winery, 231 Cal.App.2d 426, 41 Cal.Rptr. 819 (1965); Millsap v. National Funding Corporation of California, 57 Cal.App.2d 772, 135 P.2d 407 (1943).

B. The December, 1988, Agreement

Where a plaintiff alleges the existence of an implied agreement to terminate only for good cause, California law4 prescribes a two-step analysis.5Shapiro v. Wells Fargo Realty Advisors, 152 Cal.App.3d 467, 199 Cal.Rptr....

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